Home South African Treasury doggedly defends R70bn Covid-19 loan

Treasury doggedly defends R70bn Covid-19 loan

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Deputy Minister of Finance David Masondo told MPs yesterday the decision was rational and the repayment terms of the IMF were better compared to other lenders in the international and domestic market.

Deputy Minister of Finance Dr David Masondo. PHOTO: Parliament.gov.za

THE NATIONAL Treasury has defended the R70 billion loan it secured from the International Monetary Fund to fight Covid-19.

Deputy Minister of Finance David Masondo told MPs yesterday the decision was rational and the repayment terms of the IMF were better compared to other lenders in the international and domestic market.

This followed a question from EFF deputy leader Floyd Shivambu on the reason to borrow R70bn from the IMF when the country had debt service obligations of R200bn.

Shivambu said this will strain the already over-stretched fiscus and there was no need to go to the IMF.

But Masondo stuck to his guns and defended the decision to go to the IMF to fight the spread of Covid-19.

“Going to the IMF was the most rational thing we could have done under the circumstances. As someone who borrows, you want the lender who will give you the cheapest price,” said Masondo.

He said the money was not to pay the debt but to procure personal protective equipment (PPE).

Masondo added that the interest on the IMF loan was 1% compared to other lenders whose interest would have been between 7% and 8%.

He said the money was to fight Covid-19.

Masondo said they will account on how the IMF funds were used in Parliament through the standing and select committees on finance, which oversee the National Treasury.

Minister of Employment and Labour Thulas Nxesi told MPs that they will crackdown on employers who failed to pay their employees Temporary Employer-Employee Relief Scheme (Ters) funds.

He said this came after it emerged that 700 000 people had indicated they did not get the Ters funds during the lockdown.

“Around 700 000 people have indicated they have not been paid. Some of it, it’s the employers who received the money, but did not hand the money to the employees,” said Nxesi.

He said in some cases it was foreign workers who did not have the correct papers when they applied.

Nxesi insisted that no matter how long it takes they will hunt down the employers who took workers’ money and had not paid them.

The minister also said they were preparing to deal with the surge of unemployment with mass retrenchments expected as the economy continues to open.

He said their systems would have to handle this issue of people who have been retrenched.

The National Treasury had projected that about three million people could lose their jobs after the Covid-19 period.